Monsanto buys Disney

Announces Copyright Scheme for Patents

In a surprise move that was announced today, biotech giant Monsanto completed a hostile takeover of troubled Walt Disney Company for a sum of $60bn.

In recent months, many rumors were floated concerning the future of the stumbling Disney empire. Companies mentioned to have an interest were as diverse as Comcast, Microsoft and Bertelsmann. Yet few analysts suspected a crop company like Monsanto to step in. "We double-checked the press release three times before believing it," said an analyst.

The price tag is considerably cheaper than Comcast's offer of $66bn six weeks ago, but Disney's leadership problems that ousted long-time CEO Eisner and the recent breakup with money-maker Pixar sent the stock price tumbling almost 20%. "It was a steal," said a Monsanto spokesperson.

This buys Monsanto a number of television studios, including ABC and ESPN, movie studios like Touchstone and Miramax, and of course the popular theme parks in the US, France and Japan.

Monsanto is not a household name to Disney employees and customers, firmly rooted in its business of crop engineering. Monsanto is best known for its "Roundup Ready" canola and soybean seeds, which is genetically modified to tolerate their own "Roundup" herbicide.

"It's about intellectual property," said Monsanto CEO Hugh Grant, when questioned about the motives. "Both Disney and Monsanto are committed to IP, but their experience in protecting and exploiting IP is unsurpassed, especially in their animation department."

Disney recently succeeded in lobbying congress to extend copyright protection from 75 to 95 years, in what is called the "Sonny Bono Copyright Term Extension Act," in honor of the artist who believed that copyright should last forever. But for this act, Disney's icon Micky Mouse, which first appeared in 1928's Steamboat Willie cartoon, would have passed into the public domain this year. Disney's involvement prompted a "free the mouse" campaign. The copyright extension was challenged before the supreme court in Eldred vs. Ashcroft, but the case was lost. However, some of Disney's other efforts to protect their movies from piracy have fizzled, such as the the pay-per-view DIVX DVD that was to "phone home" to verify that each viewing was authorized, and DVDs that self-destruct after 48 hours.

Monsanto is also known for fiercely protecting their technology. The company holds a patent for what is dubbed the Terminator gene, which renders harvests infertile. So far undeployed over concerns that the gene might spread to other plants, Monsanto instead demands licensees (i.e., farmers) to sign a technology use agreement, which not only forbids using non-Monsanto herbicides, but in which farmers also forfeit rights to the eternal practice of re-planting harvested seeds. In Canada, Monsanto sued farmer Percy Schmeiser for growing "Roundup Ready" canola in violation of this contract. Indeed, his fields were found "contaminated" with Monsanto's plants, which he says grew from seeds "blown over by the wind from neighboring fields." Schmeiser lost his case; the court simply ruled that he was infringing on Monsanto's patent -- no matter where the seeds came from. "These people are our customers," said Monsanto spokeswoman Ms. Armstrong, "and we do value them. But we also have to protect our intellectual property rights."

"It strikes us as inconsistent that patent protection is limited to only 20 years when intellectual property is protected for 95," elaborates Grant. "We see patents as just a different kind of intellectual property, and we will work with congress to introduce legislation in order to unify patents and copyrights, to give patented technologies the protection they deserve. The United States of America will benefit from a stronger protection of its innovations."

Monsanto's motives are best expressed by a new product that was also unveiled today. Called "Animated Patent," this collaboration between the company and Disney's Feature Animation division apparently prompted the takeover. In what they call an "airtight scheme," patent applications are visualized in an animated movie. According to a brochure, it will be impossible for third parties to reproduce a patented technology without breaching the movie's copyright. Since implementing a technology involves documentation, blueprints etc. would be considered reproductions of the movie and its story. This would effectively extend patent protection to 95 years as well.

After recent box office disappointments like Brother Bear and Treasure Planet, Disney Feature Animation will stop making family films to concentrate on applying its creativity to "artistically satisfying, protectible" animations that "detail an innovation from every possible angle." Even though they are no crowd pleasers, Monsanto expects to show these movies in cineplexes and on cable TV at its own expense, because a work has to be made public to effect its copyright production.

"Of course, we will be our own first customer, protecting our market-leading line of high-yield crops," said Grant. "We have been quietly, successfully working the matter with Disney for a number of years. Now, with animated patents coming to fruitition, it seems a good inventment to buy the entire company upfront. We project revenues from licensing animated patents in the 10 digits range anually." In addition to a one-time fee, Monsanto plans to charge 1% to 10% of a product's lifetime revenues for the production of an animated patent. "By the way, the first technology protected by an animated patent is the animated patent itself," added Grant with a smile, as the movie, produced like an edutainment, unfolded in the background.

So far, analysts are sceptical that animated patents will hold water. One lawyer said, "it's far too early to tell. It will take many years, and certainly some supreme court challenges to make a final determination." Yet a lawyer with close ties to Monsanto, who asked to remain anonymous, said that recent changes in legislation, including the Digital Millenium Copyright Act (DMCA), support their interpretation. "The DMCA regulates previously-allowed personal copies. Now even internal copies and reproductions -- such as documentation relating to a patented technology -- can be considered an infringement of copyright." The lawyer also mentioned recent successes in enacting DMCA-like legislation in other contries, via World Trade Organization negotiations, allowing world-wide patent and copyright protection.

Meanwhile, even while waiting for final confirmation on the validity of the approach, other companies with large patent investments are getting in line. General Electric, Ford and Intel all said that they were "interested." Undoubtedly, they all have own legal teams investigating the matter already.

Grant dismissed questions whether Monsanto would split up Disney to sell off its "other assets" like broadcasting and the theme parks, saying that "such matters are still under consideration."

First published on April 1, 2004, as an April Fools joke. Believe it or not at your own risk.

Frank Pilhofer <fp -AT-> Back to the Homepage
Last modified: Wed Mar 31 22:54:50 2004